UNDERSTANDING PHYSICAL DAMAGE INSURANCE
Physical Damage Insurance is defined as insurance that provides physical coverage for your truck and or trailer in the event it is damaged in a motor vehicle accident. Your premium is based on the value of your equipment; usually a percentage of the value. This coverage is not required by law but if you finance your vehicle the lienholder will most likely require it. It is important to insure your vehicle for the real value or a Stated Amount. Not over or under value the vehicle as the insurance company will only pay market value (ACV) at the time of the loss.
A stated amount allows you to customize your policy to reflect your vehicles true worth. By incorporating the condition of the vehicle and comparing the retail market, you can save premium dollars.
DETERMINE STATED AMOUNT:
The best way to begin determining a stated amount is to consult a publication that specializes in valuing vehicles or retailers that specialize in tractor trailer sales:
- Truck Blue Book
- Dealerships
- Manufacturers
- Lending or financial institutions
ALSO, CONSIDER THESE FACTORS:
- Vehicle condition and mileage
- Special equipment you've added
- Any vehicle upgrades
- Engine or major component rebuilds
When you make an insurance claim, insurers’ look at your stated amount and the actual cash value (ACV) of your vehicle and pays whichever is less. So it's important to be as accurate as possible when estimating the value of your vehicle. Overvaluing your vehicle has no benefits as regardless of the premium paid, the valuation at the time of loss will be the actual cash value (ACV), minus your policy deductible.
On the other hand, if you've undervalued your vehicle, this can create a problem in the event of a total loss as the insurance company will not cover the full value for replacement of the vehicle. If your vehicle is damaged and needs repair, your insurance will only pay repair costs up to the stated amount or actual cash value (ACV), whichever is less.
To ensure you get the coverage you need, we recommend being as accurate as possible when estimating your vehicle's stated amount. If you already own a policy but feel the value of your vehicle has changed significantly, contact us to let us know. That way your insurance always reflects your actual needs.
Sincerely,
Cary Alexander
Alexander & Alexander, Inc.